AR exempts out-of-state disaster responders from certain taxes

Legislation is enacted that exempts from certain taxes and regulatory requirements out-of-state businesses and their employees who enter Arkansas on a temporary basis to provide help and assistance in response to a declared state disaster or emergency. Such an out-of-state business is exempt from registering, filing, and remitting state or local taxes and from complying with state licensing, certification, and registration requirements. The exemptions apply to state and local business and occupational licensing and registration requirements and state and local taxes or fees, including without limitation:

• unemployment insurance contributions;

• state and local occupational licensing fees and privilege taxes;

• state and local income taxes;

• state and local sales and use taxes on property temporarily brought into the state for use during the disaster response period and subsequently removed from the state; and

• state licensing, certification, and registration requirements.

Out-of-state employees. During a disaster response period, an out-of-state employee is not (1) required to file or pay Arkansas income taxes; (2) subject to Arkansas income tax withholding; or (3) required to file or pay any other state or local tax or fee, including related state or local employer withholding and remittance obligations, but not including transaction taxes or fees. However, out-of-state businesses and out-of-state employees are subject to any applicable ad valorem taxes.

Business or employee activity following a disaster response period. The exemptions do not apply to an out-of-state business or out-of-state employee who remains in Arkansas after a disaster response period with respect to activities conducted in Arkansas after the disaster response period. (Act 864 (S.B. 925), Laws 2015, effective March 31, 2015.)

For more information on this and other topics, consult the Visit our News Library.